Insurance Manufacturers of Australia Pty Ltd v Sherriff

[2000] FCA 1505

FEDERAL COURT OF AUSTRALIA

Insurance Manufacturers of Australia Pty Ltd v Sherriff [2000] FCA 1505

V 7066 of 2000
INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084
  v  BRENDAN WAYNE SHERRIFF

AND

V 7418 of 2000
BRENDAN WAYNE SHERRIFF  v  INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084  and PETER ROBERT VINCE (as Trustee of the bankrupt estate of Brendan Wayne Sherriff)

RYAN J
MELBOURNE
16 OCTOBER 2000

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY		V 7066 of 2000
BETWEEN:	INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084 Applicant
AND:	BRENDAN WAYNE SHERRIFF Respondent
AND:	V 7418 of 2000
BETWEEN:	BRENDAN WAYNE SHERRIFF Applicant
AND:	INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084 Respondent
AND:	PETER ROBERT VINCE (as Trustee of the bankrupt estate of Brendan Wayne Sherriff) Second Respondent
JUDGE:	RYAN J
DATE:	16 OCTOBER 2000
PLACE:	MELBOURNE

THE COURT ORDERS THAT:

1.That the name of the second respondent appearing in the application No V7418 of 2000 be amended to read “Peter Robert Vince (as Trustee of the Bankrupt Estate of Brendan Wayne Sherriff);

2.That the motion in proceeding V7066 of 2000 be dismissed and that the Petitioning Creditor’s costs of that motion be part of its costs to be taxed and paid out of the estate of the bankrupt;

3.The application numbered V7418 of 2000 be dismissed;

4.The costs of the first respondent of the application numbered V7418 of 1999 be taxed and paid out of the estate of the bankrupt as part of that respondent’s costs as petitioning creditor in V7066 of 2000;

5.The costs of the second respondent of the application numbered V7418 of 2000 be taxed and retained out of the estate of the bankrupt.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7066 of 2000

BETWEEN:	INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084 Applicant
AND:	BRENDAN WAYNE SHERRIFF Respondent
AND	V 7418 of 2000
BETWEEN:	BRENDAN WAYNE SHERRIFF Applicant
AND:	INSURANCE MANUFACTURERS OF AUSTRALIA PTY LTD ACN 004 208 084 Respondent
AND:	PETER ROBERT VINCE (as Trustee of the bankrupt estate of Brendan Wayne Sherriff) Second Respondent

JUDGE:	RYAN J
DATE:	16 OCTOBER 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. There is before the Court, an application for annulment of bankruptcy arising from a sequestration order made on 30 May this year.  At the outset of the hearing of the application numbered V7418 of 2000 I ordered that the name of the second respondent to that application “Ferrier Hodgson, Dandenong” be amended to read “Peter Robert Vince as Trustee of the bankrupt estate of Brendan Wayne Sherriff”.  Hereafter, that respondent is referred to as “the Trustee”.  The sequestration order was founded on non-compliance with a bankruptcy notice, said to have been served personally on 7 December 1999 at 1/28 Olive Road, Eumemmering.  The applicant asserts that he was not served with the bankruptcy notice or the creditor's petition, which is sworn to have been served by the same process server on 13 March this year, also at 1/28 Olive Road, Eumemmering. 

2. After the making of the sequestration order, the applicant attended at the office of the Trustee and completed a statement of affairs.  The applicant now disputes the existence of the debt asserted by the first respondent.  That debt was the foundation of the judgment on which the bankruptcy notice, and, subsequently, the sequestration order were based.  He also claims that he has a cross-demand or counter-claim against the first respondent.  However, no steps have been taken to set aside the judgment in the Magistrates Court, or to institute a cross-proceeding against the first respondent.

3. The Trustee has furnished a report pursuant to O 77 r 44 of the Rules of this Court, disclosing secured creditors of approximately $100,000 and unsecured creditors, said to exceed $38,000.  The applicant has asserted that all his unsecured debts, except approximately $25,000 owing to a personal friend, Ms Morse, have been repaid.  However, on 19 September this year, the Trustee wrote to the applicant, a letter which included these paragraphs:

   “I am proceeding to realise the above property [a residential property at 879 Pascoe Vale Road Glenroy] by public auction on 7 October 2000.  I will proceed with this sale unless you immediately provide me with an acceptable written proposal outlining how you propose your affairs be dealt with.  Any such proposal will require an immediate cash contribution to be made to my office prior to the proposal being put to creditors. 

   I advise that an estimate of funds required to discharge claims of creditors and the costs and expenses of the administration are as follows: 

   Creditors:

   RACV Insurance   $4,695
   [the former name of the petitioning creditor which

   was the judgment creditor in the Magistrates Court]
   Ms Lorraine Morse  $28,000
   Telstra  Unknown
   Melbourne Water  $ 2,000
   Moreland City Council  $ 3,000
   City of Casey  $   300            $40,695
   Petitioning Creditors' tax costs estimate   $3,500
   Trustee's costs to date as at 31/8/2000   $4,677
   Trustee's further costs to finalise administration   $5,000
   Real Estate Agent's Costs( estimate)   $3,000
   Solicitor's costs (estimate)   $500
   Realisation charge payable on estate (8 %)   $4,590

   Estimated total             $61,962”

   The letter then continued:

   “I advise that the lack of detail provided on your Statement of Affairs has made an accurate estimate impossible to calculate. 

   I reiterate that should an appropriate proposal not be forthcoming, I will proceed with the realisation of the property. 

   Should you wish to discuss this matter, please contact Mr Joshua Dwyer of this office.”

4. On the next day, 20 September 2000, the applicant instituted the present application for annulment of his bankruptcy. That application is apparently made under s 153B of the Bankruptcy Act1966 (“the Act”) which provides:

   “If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.”

5. I am not satisfied that the sequestration order ought not to have been made.  It was made on an unopposed petition which, on the face of an affidavit of service, had been personally served by the same process server who deposed to having served the bankruptcy notice.  No other ground has been put forward to indicate a basis on which the sequestration order ought not to have been made, except for the assertion that the judgment was not owing to the first respondent, or that the applicant had a cross-action or counter-claim against that respondent.  However, I do not consider that those assertions provide a ground on which I could found a finding that the sequestration order ought not to have been made.

6. In any event, it is clear that if the requisite degree of satisfaction which s 153B makes a condition of the making of an annulment order, is satisfied, the Court still has a discretion whether or not to make an order annulling the bankruptcy. In the present case, I would exercise my discretion adversely to the applicant because of the time which has elapsed since the making of the sequestration order and the conduct of the applicant in completing a statement of affairs and continuing to negotiate with the Trustee over the terms on which claims of creditors could be discharged. I am also not satisfied that all claims of creditors could presently be discharged out of the resources available to the applicant.

7. In these circumstances, the only basis available under the Act on which an annulment could be obtained, is that provided by s 153A(1) which provides that:

   “If the trustee is satisfied that all the bankrupt's debts have been paid in full, the bankruptcy is annulled, by force of this subsection, on the date on which the last such payment was made. 

8. In my view, that section provides the only avenue of relief available to the applicant in the present circumstances.  For these reasons, the application is refused, with costs.

9. I shall order that the motion in proceeding number V 7066 of 2000 be dismissed and that the petitioning creditor's costs of that motion be part of its costs to be taxed and paid out of the estate.  In relation to the costs on application V 7418, I shall order that the costs of both respondents be taxed and paid or retained (as the case may be) out of the bankrupt estate, the costs of the first respondent, being included in its costs as petitioning creditor.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated:             16 October 2000

V7066 of 2000

Counsel for the Applicant:	Ms S Horovitz
Solicitor for the Applicant:	Mendelsons
Counsel for the Respondent:	The respondent appeared on his own behalf.
V7418 of 2000
Counsel for the Applicant:	The applicant appeared on his own behalf.
Counsel for the First Respondent:	Ms S Horovitz
Solicitors for the First Respondent:	Mendelsons
Counsel for the Second Respondent:	Mr A White
Solicitors for the Second Respondent:	Jack Cohen, Serry & Co
Date of Hearing:	16 October 2000
Date of Judgment:	16 October 2000